The installed cost of solar photovoltaic (PV) power
systems in the United States
fell substantially in 2010 and into the first half of 2011, according to the
latest edition of an annual PV cost tracking report released by the Department
of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab).
The average installed cost of residential and
commercial PV systems completed in 2010 fell by roughly 17% from the year
before, and by an additional 11% within the first six months of 2011. These
recent installed cost reductions are attributable, in part, to dramatic
reductions in the price of PV modules. Galen Barbose of Berkeley Lab’s
Environmental Energy Technologies Division and coauthor of the report explains: “Wholesale PV module prices have fallen precipitously since about 2008, and
those upstream cost reductions have made their way through to consumers.”
The report indicates that non-module costs—such as
installation labor, marketing, overhead, inverters, and the balance of
systems—also fell for residential and commercial PV systems in 2010. “The drop
in non-module costs is especially important,” notes report coauthor and
Berkeley Lab scientist Ryan Wiser, “as those are the costs that can be most
readily influenced by solar policies aimed at accelerating deployment and
removing market barriers, as opposed to research and development programs that
are also aimed at reducing module costs.” According to the report, average
non-module costs for residential and commercial systems declined by roughly 18%
from 2009 to 2010.
Turning to utility-sector PV, costs varied over a
wide range for systems installed in 2010, with the cost of systems greater than
5,000 kW ranging from $2.90/W to $6.20/W, reflecting differences in project
size and system configuration, as well as the unique characteristics of certain
individual projects. Consistent with continued cost reductions, current
benchmarks for the installed cost of prototypical, large utility-scale PV
projects generally range from $3.80/W to $4.40/W.
The market for solar PV systems in the United States
has grown rapidly over the past decade, as national, state and local
governments offered various incentives to expand the solar market and
accelerate cost reductions. The study—the fourth in Berkeley Lab’s “Tracking
the Sun” report series—describes trends in the installed cost
of PV in the United States, and examined more than 115,000 residential,
commercial, and utility-sector PV systems installed between 1998 and 2010
across 42 states, representing roughly 78% of all grid-connected PV capacity
installed in the United States. Naïm Darghouth, also with Berkeley Lab,
explains that “the study is intended to provide policy makers and industry
observers with a reliable and detailed set of historical benchmarks for
tracking and understanding past trends in the installed cost of PV.”
Costs differ by region and
by size and type of system
The study also highlights differences in installed costs by region and by
system size and installation type. Comparing across U.S. states, for example, the
average cost of PV systems installed in 2010 and less than 10 kW in size ranged
from $6.30/W to $8.40/W depending on the state. The report also found that
residential PV systems installed on new homes had significantly lower average
installed costs than those installed as retrofits to existing homes.
Based on these data and on installed cost data from
the sizable German and Japanese PV markets, the authors suggest that PV costs
may be driven lower through large-scale deployment programs, but that other
factors are also important in achieving cost reductions.
The report also shows that PV installed costs
exhibit significant economies of scale. Among systems installed in 2010, those
smaller than 2 kW averaged $9.80/W, while large commercial systems >1,000 kW
averaged $5.20/W; partial-year data for 2011 suggests that average costs
declined even further in 2011. Large utility-sector systems installed in 2010
registered even lower costs, with a number of systems in the $3.00/W to $4.00/W
range.
Cost declines for PV system
owners in 2010 were partially offset by falling incentives
The average size of direct cash incentives provided through state and
utility PV incentive programs has declined steadily since their peak in 2002.
The dollar-per-Watt benefit of the federal investment tax credit (ITC) and
Treasury grant in lieu of the ITC, which are based on a percentage of installed
cost, also fell in 2010 as a result of the drop in average installed costs.
The reduced value of federal, state, and utility
incentives in 2010 partially offset the decline in installed costs. Therefore,
while pre-incentive installed costs fell by $1.00/W and $1.50/W for residential
and commercial PV in 2010, respectively, the decline in “net” (or
post-incentive) installed costs fell by $0.40/W for residential PV and by
$0.80/W for commercial PV.
The report “Tracking the Sun IV: An Historical
Summary of the Installed Cost of Photovoltaics in the United States
from 1998 to 2010,” by Galen Barbose, Naïm Darghouth, and Ryan Wiser, may be
downloaded from http://eetd.lbl.gov/ea/emp/reports/lbnl-5047e.pdf.
